tl;dr
The Bitcoin mining hashrate has seen an over 8% decline in the 7-day average since reaching an all-time high. This metric reflects the total computing power connected to the Bitcoin blockchain, indicating the current state of BTC miners. The decline suggests some miners may be finding Bitcoin mining...
The Bitcoin mining hashrate has seen an over 8% decline in the 7-day average since reaching an all-time high. This metric reflects the total computing power connected to the Bitcoin blockchain, indicating the current state of BTC miners. The decline suggests some miners may be finding Bitcoin mining less profitable, likely due to the relationship between miner revenue and the cryptocurrency's price. The decrease in hashrate is expected to lead to a negative difficulty change in the next scheduled adjustment, making mining easier for validators. Meanwhile, despite Bitcoin's price rising by more than 19% over the past week, the hashrate decline has continued, impacting the network's block time. On-chain data shows the Bitcoin mining hashrate has continued its decline as the price of the cryptocurrency itself has seen a setback.
The “mining hashrate” refers to an indicator that keeps track of the total amount of computing power that miners have currently connected to the Bitcoin blockchain. This metric is generally considered to represent the current situation of the BTC miners. When the value of the indicator rises, it means new miners are joining the network and/or old ones are expanding their facilities. Such a trend implies the chain is looking attractive to these chain validators. On the other hand, a decline in the metric suggests some miners have decided to disconnect from the network, potentially because they are no longer finding BTC mining to be profitable.
As displayed in the above graph, the 7-day average Bitcoin mining hashrate had surged to a new all-time high (ATH) near the end of last month, but since then, it has been observing a constant decline. The ATH occurred as the BTC price rallied up, and the drawdown in the metric coincided with a period of bearish momentum for cryptocurrency. The reason behind this close relationship is the fact that miner revenue is very much tied to the asset’s price. These chain validators make their income from two sources, transaction fees and block subsidy, but the latter of the two has historically dominated their revenue. When the asset’s value goes up, so does that of these rewards, and hence, that of the miner revenue.
One consequence of the constant mining hashrate drawdown is that the network is set to see a negative difficulty change in its next scheduled adjustment. The difficulty is a feature of the Bitcoin blockchain that controls how hard miners would find it to mine on the network. The existence of the difficulty is what allows for the block subsidy to be given out at fixed intervals. As the miners have been decreasing their hashrate recently, the block time has been slower than usual. The Bitcoin blockchain will now decrease the difficulty by over 4% to make things easier for the validators.
At the time of writing, Bitcoin is trading at around $59,700, up more than 19% over the past week. The price of the asset appears to have gone down over the last day or so.